Medi-Cal Planning 101: California 2026 Update
Pillar One: Eligibility
Before Medi-Cal will pay for long-term care services — whether in a nursing home, assisted living, or at home — an applicant must meet both medical and financial eligibility requirements. On the financial side, everything starts with understanding assets.
Exempt vs. Non-Exempt Assets
Medi-Cal draws a fundamental distinction between exempt assets and non-exempt assets. Exempt assets are not counted toward the eligibility limit. Non-exempt assets are counted, and they are what we need to plan around. Exempt property includes the principal residence (which remains fully excluded even if the applicant is not currently living there, as long as they express an intent to return), one vehicle, and household belongings. Non-exempt assets generally include cash savings, investment accounts, additional real property, and most other financial holdings. As of January 1, 2026, Medi-Cal reinstated an asset limit for non-MAGI programs — the programs that serve older adults and people with disabilities. That limit is $130,000 for an individual and $195,000 for a couple, plus $65,000 for each additional household member. Families who are asking how much can you have in assets and still qualify for Medi-Cal often don’t realize that with proper planning, the answer may be significantly more than those headline numbers suggest. The goal of eligibility planning is to get a complete picture of everything the applicant — and their spouse — owns, and then develop a strategy to position those assets in a way that achieves eligibility while preserving as much as possible for the family. Here are the primary planning tools we use:
1 Exempt Asset Maximization
Before exploring more complex strategies, we always start by identifying what is already protected. Many families are surprised to discover how much they can shelter without any formal legal planning. The primary home, one vehicle, and certain retirement accounts are all exempt from Medi-Cal’s asset count. IRA and pension accounts held in the name of the community spouse are not counted, and the community spouse does not need to be receiving periodic distributions in order to exclude them. Understanding what you already have in the exempt column is the foundation of any good plan.
2 Spend-Down Strategies
When a client has non-exempt assets above the limit, one approach is a strategic spend-down — using those funds in ways that are permitted under Medi-Cal’s rules and that benefit the family. This can include paying off a mortgage, making home improvements, purchasing a vehicle, prepaying funeral and burial expenses, or paying for needed medical equipment and care. The key distinction from a random spend-down is intentionality — every dollar spent should be directed toward something that either creates lasting value or converts to an exempt asset.
3 Converting Non-Exempt Assets to Exempt Assets
In some cases, countable assets can be repositioned into exempt categories rather than simply spent. For example, using savings to pay down or pay off the balance on the primary residence converts a non-exempt liquid asset into an exempt one — the home equity. For families worried about how to protect the family home from Medi-Cal, this is one of the most important concepts to understand early in the planning process.
4 Spousal Protections — The Community Spouse Resource Allowance (CSRA)
For married couples, Medi-Cal’s Spousal Impoverishment rules are one of the most powerful tools available. When one spouse needs long-term care Medi-Cal, the law does not require the other spouse to spend down to almost nothing. Under Spousal Impoverishment protections, the person on Medi-Cal can have up to $130,000 in their name, while the spouse at home can keep up to the Community Spouse Resource Allowance (CSRA) — which in 2026 is $162,660 [verify current figure against DHCS].
5 Trust Instruments and Court Petitions
In more complex situations, formal legal tools may be appropriate. Irrevocable trusts and special needs trusts can play an important role in long-term eligibility planning, particularly when there are concerns about future asset accumulation or inheritance. Assets held in a revocable trust are counted toward the asset limit, so trust planning requires careful structuring to be effective. In certain circumstances — particularly involving married couples who need court authorization to reposition jointly held assets — a court petition may also be warranted.
Pillar Two: Share of Cost Reduction
Qualifying for Medi-Cal isn’t always an all-or-nothing proposition. Many applicants who have income above Medi-Cal’s no-cost threshold can still qualify for coverage — but they will have a share of cost. This is the amount a beneficiary must contribute toward their own care costs each month before Medi-Cal begins paying for covered services. For families navigating assisted living, share of cost planning takes on particular importance. To participate in the Assisted Living Waiver (ALW) program — Medi-Cal’s program for seniors who need nursing-facility-level care but wish to remain in a community setting — participants must be eligible for full-scope, no share-of-cost Medi-Cal benefits. This means that having a share of cost can actually be a barrier to accessing the ALW, making it critical to explore every available avenue for reducing or eliminating it. For married couples, there are often significant planning opportunities under Spousal Impoverishment rules. If one spouse is considered “institutionalized” — either by living in a nursing home or by being enrolled in or on a waitlist for a participating Medi-Cal Home and Community Based Services program — the couple may be able to access higher monthly income allowances and reduced share of cost. There are also specific deductions available to residents of assisted living facilities that can dramatically reduce or eliminate a share of cost. For a deeper dive:
Pillar Three: Asset Protection
Getting a loved one qualified for Medi-Cal is an important achievement — but it’s only part of the picture. Families are often surprised to learn that Medi-Cal can seek reimbursement for the costs it paid after the beneficiary passes away. This is known as the Medi-Cal Estate Recovery Program, and understanding it is essential to protecting your family’s legacy. Here’s how it works: Repayment is limited to estate assets subject to probate that were owned by the deceased beneficiary at the time of death, and applies to payments made for nursing facility services, home and community-based services, and related hospital and prescription drug services. In other words, Medi-Cal’s recovery claim runs through the probate process — the legal procedure by which a deceased person’s assets are identified, valued, and distributed.
This means that proactive estate planning — structuring assets so they pass to heirs outside of the probate estate — is one of the most powerful tools available for protecting what you’ve worked to build. At Elder Care Law California, asset protection planning looks at the full picture: how title is held on real property, how financial accounts are structured, whether beneficiary designations are in place, and whether trust instruments should be used to ensure a smooth, protected transfer to heirs. It’s also important to know that DHCS does not have a claim until after the Medi-Cal client’s death — and the death of any surviving spouse. Nothing is owed during the client’s or surviving spouse’s lifetime. This gives families meaningful time and opportunity to plan — and underscores why the combination of Medi-Cal planning and estate planning, done together, produces the best outcomes for families.
Frequently Asked Questions
This blog post is intended for general informational purposes only and does not constitute legal advice. Laws and program rules change frequently. Please consult a qualified elder law attorney for advice specific to your situation.